Equities firm MST Access believes changes to the Government of Mongolia’s mining code has the potential to benefit foreign investment with revisions to the nation’s laws expected later this year.
One of the potential beneficiaries of the proposed changes is ASX-listed Xanadu Mines that is aiming to develop its Kharmagtai copper-gold project in Mongolia.
An independent assessment by MST Access — engaged by Xanadu — expects the government’s updated mining code to be competitive with other successful mining jurisdictions.
The firm says Mongolia is seeking to attract foreign investment and lower barriers to doing business, particularly in the mining industry.
The changes are aimed at boosting in-country investment, underpinned by improving investor confidence and conviction.
MST argues the Mongolian government’s key priority is to draw in new investment prospects and ensure transitional arrangements take on board suggestions in addition to lessons learnt from existing investors.
Mongolia’s reputation as a mining jurisdiction is seen to be ever increasing in terms of resource project discovery and development, with highly prospective and under-explored geology.
The country’s potential has been highlighted by the magnitude of Xanadu’s Kharmagtai project that has a mineral resource estimate identified at a massive 1.1 billion tonnes for 3 million tonnes of contained copper and 8 million ounces of gold.
MST says that during the recent 2022 Mongolian Economic Forum in April, mining was identified as a key area of focus for Mongolia’s ‘New Revival Policy’ as part of the country’s long-term development plan — Vision 2050.
Just last month Xanadu received Australian Foreign Investment Review Board approval for Chinese mining giant Zijin to acquire shares in the company to develop Kharmagtai.
The board’s no-objection notification is the first of three approvals required for Zijin to continue its three-phase investment in Xanadu that was announced in April.
The deal still requires approval from the Chinese Government and Xanadu shareholders in order to be formalised.
However, Xanadu is confident both approvals are on track in addition to funding from the remaining two investment phases for the upcoming December quarter.
MST Access says it considered Australian FIRB approval to be of higher risk relative to the People’s Republic of China and shareholder approval and the key risk to the transaction proceeding.
According to the Australian Department of Foreign Affairs and Trade, Mongolia has the potential for major economic expansion over the coming decades with its wealth of natural resources.
In 2013 the department introduced the Australia-Mongolia Extractives Program that aims to improve government capacity to manage a vital resource for Mongolia and underlines Australia’s political and commercial interest in a well-functioning extractives sector in the country.
Xanadu has recently kicked off a new exploration campaign at the company’s highly prospective Red Mountain project in the South Gobi region of Mongolia targeting shallow high-grade gold, silver and copper.
The company has a 100 per cent share in Red Mountain where early exploration has defined broad zones of strong quartz stockwork veining and associated high-grade gold mineralisation.
The project has a 30-year mining licence and comprises an underexplored porphyry district covering about 57 square kilometres.
As the Mongolian government continues to make changes to its foreign investment framework and mining laws, companies like Xanadu appear to be in the box seat to reap the benefits.
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